Correlation Between Nomura Holdings and Ambev SA

Can any of the company-specific risk be diversified away by investing in both Nomura Holdings and Ambev SA at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Nomura Holdings and Ambev SA into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nomura Holdings and Ambev SA, you can compare the effects of market volatilities on Nomura Holdings and Ambev SA and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Nomura Holdings with a short position of Ambev SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nomura Holdings and Ambev SA.

Diversification Opportunities for Nomura Holdings and Ambev SA

-0.57

Correlation Coefficient

Nomura Holdings  Ambev SA

Excellent diversification

The 3 months correlation between Nomura and Ambev is -0.57. Overlapping area represents the amount of risk that can be diversified away by holding Nomura Holdings and Ambev SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ambev SA and Nomura Holdings is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Nomura Holdings are associated (or correlated) with Ambev SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ambev SA has no effect on the direction of Nomura Holdings i.e., Nomura Holdings and Ambev SA go up and down completely randomly.

Pair Corralation between Nomura Holdings and Ambev SA

Assuming the 90 days trading horizon Nomura Holdings is expected to generate 1.83 times more return on investment than Ambev SA. However, Nomura Holdings is 1.83 times more volatile than Ambev SA. It trades about 0.15 of its potential returns per unit of risk. Ambev SA is currently generating about 0.03 per unit of risk. If you would invest  3,099  in Nomura Holdings on September 4, 2024 and sell it today you would earn a total of  671.00  from holding Nomura Holdings or generate 21.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Nomura Holdings  vs.  Ambev SA

Nomura Holdings

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Nomura Holdings are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Nomura Holdings sustained solid returns over the last few months and may actually be approaching a breakup point.

Ambev SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ambev SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Ambev SA is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Nomura Holdings and Ambev SA

The main advantage of trading using opposite Nomura Holdings and Ambev SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nomura Holdings position performs unexpectedly, Ambev SA can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ambev SA will offset losses from the drop in Ambev SA's long position.

The idea behind Nomura Holdings and Ambev SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.